Currency Boards as Political Commitments: Comparative Experience, Gold Reserves, and the Lebanese Case

This report was originally published on the website of the Middle East Institute ( mei.edu)

The following study discusses the role of Lebanon’s gold reserves in the establishment of a currency board and evaluates four policy options: a true currency board, constrained central bank reform, full dollarization, and a unified managed float. Gold reserves are relevant under all four. The conclusion is consistent across them: no monetary framework, however carefully designed and however well backed, can substitute for the prior political decision on who bears Lebanon’s losses and how the state will finance itself sustainably.